Global Macro: Rising Treasury Rates an Overreaction to Fed

As Treasury rates rise on Bernanke's comments last week, economic data may be pointing toward a flattening of the yield curve.

Expect the U.S. yield curve to flatten in the following weeks, especially if inflation expectations fail to begin their ascent.

The final pair is of SPDR Homebuilders ETF ( XHB) over S&P Equal Weight ETF ( RSP), which measures the relative strength of U.S. homebuilders' stocks versus the broader market.

When Bernanke began to target long-term rates and mortgage-backed securities in 2012 to spur investment, homebuilders stocks got a major boost. Declining mortgage rates and an improved labor market led to more housing demand.

With the recent rise in long-term rates, the pair below fell to yearly lows. Although the economy has improved, less government support is likely to weigh on the housing sector. If economic data fail to show considerable improvement and the labor market remains tepid, stocks tied to housing will remain weak.

At the time of publication the author had no position in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Andrew Sachais' focus is on analyzing markets with global macro-based strategies. Sachais is a chief investment strategist and portfolio manager at the start-up fund, Satch Kapital Investments. The fund uses ETF's traded on the U.S. stock market to gain exposure to both domestic and foreign assets. His strategy takes into consideration global equity, commodity, currency and debt markets. Sachais is a senior at Georgetown University earning a degree in Economics.